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Families are increasingly unable to help each other out, according to research from the Chelsea Building Society.

The society surveyed over 1000 family members and found that while 59% of people are willing to help their families – almost 30% are unable to do so due to the rising cost of living.

Families are countering this inability to help financially by offering more traditional assistance to each other. Most commonly this is in the form of providing accommodation free of charge to immediate family members (54%) and offers to look after children so that immediate family members can work (51%), far outweighing those who are prepared to make a specific financial sacrifice or extend a financial helping hand.

Only 15% of adults would take out a joint credit card with an immediate family member in financial straits.

When it comes to paying off a relative’s debts families are marginally more likely to loan money (29%) than give it (26%). This contrasts to when families help each other out with big purchases, when they are more likely to give money (13%) than lend it (10%).

Recent economic straits are bringing the family together financially, with grown up children still living with parents for free or reduced rent (13%) and grandparents occasionally subsidising school fees (7%).

Chelsea’s research showed a clear difference in attitudes towards lending to immediate and extended family members. As personal financial circumstances may become more stretched, families are understandably much more likely to lend to those closest to them. 22% said that they would remortgage their house to help out an immediate family member in financial difficulty’, but only 2% would take this step for a relative in their extended family.

Almost six out of every 10 Britons would be happy to help out their mothers financially, should they need it but less than half (45%) would offer the same assistance to their fathers. Nuclear family lending remains pretty stable, with 37% prepared to help their brothers or sisters financially, and 33 and 34% prepared to help out their daughters and sons respectively.

Britons have had a largely positive experience with lending money to family members. In 60% of cases when money is lent, it is repaid swiftly with thanks.

Darren Stevens, director of customer services at Chelsea Building Society, said: “Whereas previously Britons could rely on their family members to bail them out when they got into difficulty, now when they turn to their families as a last resort they might find that their families are also suffering the pinch. A lack of extra funds means that families have to help each other out in non-financial ways.

“Britons should start taking control of their own finances through proper financial planning and saving, bypassing a potentially embarrassing situation within their own families.”

Voluntary guidelines for lenders, which state repossession should only be a last resort, should be binding on all lenders, according to the Liberal Democrats. The party has also called for mortgage rescue schemes, commonly known as sale and lease back, to be regulated.

In its latest proposals to help families facing the threat of repossession, the Liberal Democrat Party has called for the Government to stop propping up the housing market, and start helping those in difficulty.

Liberal Democrat shadow chancellor, Vince Cable, says: “The Government seems obsessed with fighting a losing battle to artificially prop up the housing market, rather than finding ways to deal with its worst effects.

“Ministers must act to help the thousands of families struggling to keep a roof over their heads.”

Cable has proposed introducing a regulated mortgage rescue service, where struggling families can sell part or all of the equity in their home, and rent it back from a housing association or private firm.

He also called on the Government to make it easy for councils to borrow money to buy up land and empty homes to use for social housing projects.

“The Government should allow councils and housing associations to buy up land as well as empty homes to help replenish Britain’s much depleted stock of social housing,” he says.

“Ministers must also tighten up repossession rules, to ensure that people’s homes are only ever repossessed as a last resort.”

Currently, the Council of Mortgage Lenders operates a code of conduct, which says repossession should only be used when all other possible resolutions have been exhausted. The Liberal Democrats want this voluntary code to become law.

Despite personal finance issues taking centre stage over the past year, the financial literacy of British adults has declined compared to this time last year, according to Abbey Banking.

The research is based on a simple GCSE-level personal finance exam conducted among a group of adults in August 2007 and repeated a year on.

It found this year, one in seven adults (7.1m) would fail to achieve the 40% pass mark needed to obtain a grade C; a rise of 1.2m since last year when one in ten would have failed.

Reassuringly, 25% of adults matched last year’s tally of A*s but A grades were down this year by 2% to 28%.

Steve Shore, director of Abbey Banking, says: “While most people are in the realms of a GCSE pass, the failure rate has increased by over one million. Quite worrying given that the credit crunch and cost of living has dominated the front pages for the past twelve months – and people say that they are more interested in understanding their finance than ever before.”

Government plans to introduce personal finance skills into Maths GCSE should certainly be welcomed by 18-24 year olds, since the age group’s average score of 56% in 2007 dropped to 53% in 2008, says Abbey Banking.

The most common wrongly answered question this year was answered incorrectly by 88% of Britons, who didn’t know they get six weeks to pay back a credit card before it accrues interest.

An estimated 38% failed to explain negative equity is where a mortgage is larger than the value of a house, a marked improvement on 47% last year.

A quarter of Britons were unaware that failure to pay a secured loan meant their house could be sold to pay for the loan, while 18% did not understand what hire purchase is, marking a rise of 6% from last year.

Additionally, the module can produce graphs and comparison documents to illustrate and compare a customer’s current repayments against that of a consolidated loan.

Mark Lofthouse, CEO of Mortgage Brain, said: “Sourcing systems play a pivotal role in the mortgage advice and sales process and we believe that intermediaries will benefit hugely from the wealth of new features and the greater flexibility that Mortgage Brain 6.70 provides.

“The Debt Consolidator Calculator will help brokers to give more informed advice to their customers and is just one of many new modules integrated into the new system, which, along with a number of other enhancements, makes Mortgage Brain 6.70 the most comprehensive, accurate and easy to use system available.”

More than one in three of the UK population over the age of 55 have outstanding unsecured debts and could be heading towards retirement with £66 billion in the red.

This equates to an averaging £11,106 per head.

The analysis based on 4,507 people in the UK aged 55 and over who released equity in their home with Key Retirement Solutions in 2007, reveals that almost one in four have outstanding loan payments owing £8,766 on average per head.

One fifth have outstanding credit card debts and owe £8,358 on average per head and only 3% are in the red, but £3,667 is owed on average per head.

The average outstanding mortgage debt stands at £37,316 per head for this age group.

KRS is concerned that the further people reach in retirement the deeper in debt they seemingly become. The total unsecured debt for those aged 55-59 is over £2.5 billion and this takes on a huge increase of 747% reaching a total of over £22 billion for the over 70s, which is on average £10,659 per head with an average monthly payment per head of £244.

Dean Mirfin, business development director at Key Retirement Solutions said: “As the cost of living is on the up, these figures, even if they are only part reflective of pensioners as a whole, are of real concern. Retirement should be a time to enjoy yourself after all those years of hard work, yet one in 20 people in their 60s, 70s and 80s admit to constantly struggling to keep up with financial commitments or having fallen into arrears.

“The cost of living for the elderly has surpassed inflation over the past decade therefore it is more important than ever that consumers are aware of the dangers of approaching retirement with such large amounts of debt.”

Chris Tapp, director of charity Credit Action, said: “In recent years there has been a ‘buy now, worry about it later’ culture in the UK when it comes to borrowing, particularly on unsecured forms of credit. For many pensioners today these figures show it’s a case of ‘bought then, worrying about it now.’ With the cost of living increasing dramatically – particular as winter approaches and fuel costs mount up – it is vital that those struggling are given the help they need to ensure that people aren’t trapped by debt but are given the necessary advice and support to enable them to stay in control of their money and their lives.”

Recent figures showing a decrease in the number of bankruptcies and IVAs are just the lull before the storm, according to TCF Debt Solutions.

“It really isn’t rocket science,” said TCF’s managing director, Andy Moody. “Whatever comfort the government was seeking in these figures is just an illusion. We know from the growing number of enquiries that we are receiving as well as the evidence from the CAB, showing that they cannot handle the number of people enquiring about help with debts that we are sitting on the edge of the volcano before the main eruption has started.”

TCF Debt Solutions has seen the enquiry level increasing at the rate of 20% per month since January. Moody believes that intermediary involvement will be crucial to deal with the number of people in trouble and looking for help.

“The help that intermediaries can give clients in financial trouble by referring then to a specialist debt solutions firm when they can see there is no other solution, could ensure that fewer people spiral down into financial despair. With their knowledge of the clients’ circumstances and access to the right type of specialist advice, the expansion of runaway consumer debt can be stemmed.”

There were 18,900 cases where lenders took possession of property in the first half of the year, according to the Council of Mortgage Lenders. This compares with 13,400 in the second half of 2007, and 12,800 in the first half of 2007.

On arrears, the total number of households with arrears of three months or more was 155,600 at the end of the first half of the year, up from 129,600 at the end of 2007 and 120,800 at the end of the first half of last year. The arrears rate stood at 1.33% of all mortgages, up from 1.10% at the end of 2007 and 1.02% at the end of the first half of last year.

The CML is maintaining its forecast of 45,000 total possessions and 170,000 mortgages in arrears of more than three months by the end of the year. The lender body says these numbers remain “extremely small” when seen in the context of the 11.74 million mortgages in the UK.

The possession rate was 0.16% in the first half of the year, up from 0.11% in both the first and second halves of 2007. The possession rate now is similar to that of the late 1990s, but remains less than half the rate experienced in the early 1990s.

The CML numbers relate only to first mortgages, not to other consumer loans secured on people’s homes.

CML director general Michael Coogan said:”The number of people facing difficulty needs to be kept in perspective. The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market for those coming off cheaper original deals.

“But it is inevitable that more borrowers’ coping strategies will come under pressure in current conditions than in the unusually benign years of the last decade. That’s why lenders, government and the advice sector are working closely together to minimise the impact on borrowers.

“We will continue to work on behalf of the whole industry with the FSA and others to ensure fair practices are maintained. And we continue to press the government to play its part in creating an effective safety net for vulnerable borrowers facing a short term loss of income through better state support.

“No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well. The focus of lenders’ arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender. Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options – the earlier the better.”